Differential Fertility, Human Capital, and Development

Using micro-data from 48 developing countries, I study changes in cross-sectional patterns of fertility and child investment over the course of the demographic transition. Before 1960, children from larger families obtained more education, in large part because they had richer and more educated parents. By century's end, these patterns had reversed. Consequently, fertility differentials by income and education historically raised the average education of the next generation, but they now reduce it. While the reversal is unrelated to changes in GDP per capita, women's work, sectoral composition, or health, roughly half is attributable to rising aggregate education in the parents' generation. The results support a model in which rising returns to human capital investment lower the minimum income at which parents invest.